A common-value auction with state-dependent participation

Stephan Lauermann*, Asher Wolinsky

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


This paper analyzes a common-value, first-price auction with state-dependent participation. The number of bidders, which is unobservable to them, depends on the true value. For participation patterns with many bidders in each state, the bidding equilibrium may be of a “pooling” type—with high probability, the winning bid is the same across states and is below the ex ante expected value—or of a “partially revealing” type—with no significant atoms in the winning bid distribution and an expected winning bid increasing in the true value. Which of these forms will arise is determined by the likelihood ratio at the top of the signal distribution and the participation across states. We fully characterize this relation and show how the participation pattern determines the extent of information aggregation by the price.

Original languageEnglish (US)
Pages (from-to)841-881
Number of pages41
JournalTheoretical Economics
Issue number2
StatePublished - May 2022


  • Auctions
  • D44
  • D82
  • information aggregation
  • search

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)


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